Cuadrilla says early shale will be costly

LONDON, Dec. 6 (UPI) -- British energy company Cuadrilla Resources said an emerging shale gas industry in the country could be expensive during the preliminary stages of development.

British Chancellor of the Exchequer George Osborne in an address to Parliament said shale natural gas is expected to make a "substantial contribution" to domestic supplies starting next decade.

"We are consulting on new tax incentives for shale gas and announcing the creation of a single Office for Unconventional Gas so that regulation is safe but simple," he said in his so-called Autumn Statement. "We don't want British families and businesses to be left behind as gas prices tumble on the other side of the Atlantic."

The United States is in the midst of a shale natural gas boom as new drilling technologies give explorers access to previously untapped reserves.

Last week, The Daily Telegraph newspaper in London said it expects the British government to lift a ban on shale natural gas development. Cuadrilla Resources Chief Executive Officer Francis Egan told the newspaper his company would "press on quickly" once London lifts the ban.

British Energy Secretary Ed Davey told the newspaper in October, however, that that shale gas won't be a "silver bullet" that will usher in an era of cheap energy for the country.

Cuadrilla last year halted shale gas extraction at a site in northwestern England because of small tremors reported near its operations. The company, in a response to Osborne's announcement, said it expected initial exploration of shale to be costly "at the outset, but will reduce over time as the industry grows."

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